Agenda item

Cllr Calum Miller, Cabinet Member for Finance, Lorna Baxter, Director of Finance, and Melissa Sage, Head of Procurement and Contract Management have been invited to present a report on Social Value and the Council’s Social Value Annual Report 2022/23.

The Committee is recommended, having considered the report and responses to questions, to AGREE any recommendations arising therefrom.

Cllr Calum Miller, Cabinet Member for Finance, Lorna Baxter, Director of Finance, and Melissa Sage, Head of Procurement and Contract Management were invited to present a report on Social Value and the Council’s Social Value Annual Report 2022/23.

Cllr Miller began the presentation noting that whilst the results showed successes though its social value policy, the first year of reported results meant that the Council was still leaning towards its pilot stages and refinements would be welcomed. Weightings for social value considerations within tenders were a balance between social value and commercial value, but the Council’s weightings had been deemed by The Social Value Portal as sitting in the sweetspot where social value was maximised without increasing prices.

Given the ongoing reporting, Melissa Sage was able to provide an updated figure on the value of social value delivered - £900,745. This was an increase from the reported £534k. Seeing promised value begin to be delivered at scale was very welcome. Notwithstanding this, members queried that this figure represented approximately a quarter of the promised delivery and sought assurances that the promised delivery would be fully realised. In response, it was explained that social value only began to be recorded once a contract reached a £100k spend-threshold, meaning that there was a built-in delay between promises and delivery whilst that threshold was reached. Responsibility for tracking the delivery of promised social value was the responsibility of the Council’s partner, the Social Value Portal. Commitments made were a contractual obligation, and failure to deliver the promised value would leave the Council with the standard remedies for breaches of contract.

The evidence base behind the idea that a higher rate of weighting for social value would increase costs or put off suppliers was challenged. In reply, it was explained that the Council had followed the advice and experience of the Social Value Portal, a leading organisation nationally on this topic. There was not always a clear correlation between higher social value weightings and more delivery of social value; doing so could favour bigger, national companies versus local SMEs. No case studies had been undertaken by the Social Value Portal, but their advice was based on their assessment of what they had seen put forward at tender stage, evaluation and delivery.

Barring certain exceptions, such as using a framework which does not include social value, contracts above £100k were now subject to a social value weighting. Additional support was provided pre-tender to SMEs, as well as a separate, simpler sub-£100k tendering process. The Council did, however, have to remain within the law, including those with prohibited breaking up contracts to favour SMEs. It was possible to include social value weightings in lower-value contracts, but it would not necessarily be wise as the cost of monitoring could become significant relative to the value of the contract itself and it would require an expansion of engagement by many non-procurement officers with the Social Value Portal. Members reiterated their wish to see the Council doing all it could to simplify the tendering process for smaller organisations.

The Committee queried the tightness of definitions within the social value process and explored whether the terminology allowed potential providers to determine their meaning. In response, the vagueness of much of the terminology in use was recognised. However, the Council had had the opportunity to select which of the government-set Themes, Outcomes and Measures (TOMs) best correlated with its understandings and intentions around social value. The Council’s current approach was to use a broad selection of TOMs, so as to allow providers a range of opportunities to provide different sources of social value.

The Committee contested whether it was right for the Council to delegate the interpretation of TOMs to a limited company, as well as investigating whether it could develop its own TOMs. For example, it was suggested that co-operative structures were inherently more socially beneficial than other ownership structures, and that the Council should be weighing this as part of its tender guidelines and evaluations. In response, central government did not deem co-ooperative ownership to be a social value. This meant the Social Value Portal had not accorded it a TOM. To include any bespoke TOM at the assessment stage of tendering, as required, it would be necessary to determine its financial equivalent benefit and have that adopted by the Social Value Portal. One suggestion put forward by the Committee was to take on board definitions used in Wales, giving effect to the Future Generations Act.

Joint procurement was put forward by the Committee as a means of enabling greater involvement of smaller organisations within large tenders. It was accepted that the Council, bar a small number of social care procurements, was not involved in joint procurement. However, frameworks developed were designed to allow other organisations to use them should they wish. Overall, however, joint tendering did tend to have the impact of increasing contract sizes, which reduced the ability of smaller organisations to compete. The key element was not felt to be joint tendering so much as the pre-engagement work with SMEs to understand the barriers faced by them and to structure  tenders in a way that recognised these challenges.

Committee members discussed issues around climate action, noting the paucity of commitments in this area relative to other forms of social value. Further concern was raised over the desirability of some climate-related TOMs, which promoted activities such as carbon-offsetting, which had been deemed to be ineffective at reducing carbon emissions, or innovative measures to reduce carbon emissions, whose efficiency could not be guaranteed.

ACTIONS:

It was agreed that

-        members would be provided the data on the number/value of contracts run by the Council which were subject to social value weightings vis a vis those which were not. Similar data around the number and value of contracts above and below £100k would also be provided.

-        A briefing would be held for all members on the Social Value Act 2012

-        Melissa Sage to contact the Social Value Portal to ascertain whether those Welsh TOMs relating to Future Generations could be used as part of the Council’s chosen set of TOMs.

It was AGREED that the Committee would make recommendations to Cabinet on the following, subject to agreement of the draft by the Chair and vice Chair

1)    The Council investigates how it can undertake greater pre-engagement with SMEs and cooperatives to understand the issues faced in securing contracts.

2)    The Council clarifies the objectives it wishes to achieve through its social value policy, choosing measures and weightings which support those objectives

3)    The Council investigate how it might develop a more bespoke model of social value, to include consideration of: how it might support co-operatives to tender for contracts, selecting TOMs which truly drive climate action benefits, and whether Future Generations-related TOMs might be adopted.

4)    That the Cabinet provides a written outline of the next steps it intends to take to develop and finesse its social value policy

The following observations were also agreed:

-        That insufficient progress on progressing the Social Value agenda has been made to date

-        That the Council investigate the potential of joint procurement with the Oxford Inclusive Economy Partnership as a means of supporting smaller businesses to participate in more contracts